Why the Apple Sell-Off Is Only Just Beginning

By MoneyShow.com Feb 01, 2013 2:45 pm

How and when to short the stock depends on your perspective.

So How and When Do You Short Apple?
That depends on your perspective. Tactically speaking, Apple's a short–term trader's dream. Expensive and marginable, it moves a lot. That means there's opportunity in both directions.

If you're one to trade earnings announcements, here's something to consider. Birinyi Associates noted to CNBC that Apple stock has "gained 70% of the time in after–hours trading on the day it reported," but 68% of the time it's closed lower on the following day, by a half a percent on average. It's already tanked as of press time, so these numbers appear pretty much worthless except as a frame of reference.

I think the more attractive price action on the short side is longer–term. I expect Apple's shares to generally trade lower through the balance of the year.

Absent some real innovation, I believe the iPad/iPhone combination will continue to lose valuable consumer ground both in terms of appeal and utility. I see this translating into reduced product appeal that directly impacts product introduction cycles and slows revenue growth.

In that sense, the real news is not what happened this earnings cycle, but the ones that are two—even three—quarters from now, when gross margins are under real pressure. It's no wonder, under the circumstances, that Apple guided lower again and declined to provide a profit forecast. I think they know it, too.

Editor's Note: This article was written by Keith Fitz-Gerald of Money Morning.

Below, find some more great investing and trading content from MoneyShow:

4 Top Techs in a Buy Range

Free Cash Flow Is Key to 2013 Success

Are You Ready for a February Surprise

Twitter: @TopProsTopPicks

< Previous

Next >

View As One Page

No positions in stocks mentioned.

Click Here to read the disclaimer >

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.